City-Owned Utilities Are Good Even for Cities That Don't Choose Them
The notion that SDG&E customers who are not part of a city-owned utility carry an additional cost burden is simply not true. The growth of CCAs has put pressure on investor-owned utilities to compete in terms of rates and products offered.
Public energy programs are launching across California, with 19 programs currently serving customers and many more being developed. Community choice aggregators, or CCAs, are paving the way for California to achieve its ambitious climate targets while providing customers with continued reliable and affordable energy.
Most operational CCAs in California have goals of procuring power from greener, carbon-free energy sources. Six local cities — Chula Vista, Del Mar, Encinitas, La Mesa, San Diego and Solana Beach — have distinguished themselves as state leaders by establishing their goals of 100 percent clean power by 2035, or sooner. The creation of CCAs could be instrumental in achieving these goals.
Until recently, investor-owned utilities like San Diego Gas & Electric enjoyed a virtual monopoly on supplying power to energy customers in California. This meant that, with no other options for consumers, utilities were guaranteed customers.
Then in 2002, in the wake of the energy crisis, the California Legislature passed a law that enabled the creation of CCAs, allowing local communities to take control of the energy they buy and easing constraints on competition that contributed to the crisis.
Over the last few years, CCAs in California have been introducing greater options for communities to access clean renewable energy and delivering local programs that benefit residents and businesses, rather than utility shareholders. Yet, despite their success, we’ve seen some fear-mongering and misinformation surrounding the creation of a CCA in San Diego. These assertions are unsubstantiated. Specifically, the notion that SDG&E customers who are not part of a CCA carry an additional cost burden is simply not true. The law requires that both classes of rate payers — utility customers and CCA customers — be treated equally and that neither group bears the financial burden of the other.
In a technical study completed last year, the city of San Diego found that a CCA could deliver more renewable energy while saving city residents and businesses money over time compared with SDG&E. Meanwhile, a third-party review of a competing proposal by SDG&E found that the utility’s approach was short on details and raised more questions than it answers. SDG&E’s proposal “gives little or no information about the approach, costs, or risks,” the review said.
In June, Solana Beach launched the first CCA in San Diego County in large part to meet its Climate Action Plan goals, offering a cleaner default energy product than SDG&E and a 100 percent renewable option. Solana Energy Alliance has been successfully operating since then and is achieving its goals of providing more renewable energy at reduced rates to its customers.
The cities of Encinitas, Del Mar, Carlsbad and Oceanside are currently studying the feasibility of jointly forming a CCA. The final report is anticipated later this year.
We’ve seen throughout California that CCAs are performing as intended — delivering reliable, affordable and clean energy to millions of customers, while exceeding the state’s ambitious climate goals. Breaking up existing utility monopolies in California has introduced fair competition and choice that is driving innovation and cost savings for energy customers.
Indeed, the growth of CCAs has put pressure on investor-owned utilities to compete in terms of rates and products offered, according to UCLA’s Luskin Center for Innovation. “The rise of CCAs has had both direct and indirect positive effects on overall renewable energy consumed in California, leading the state to meet its 2030 RPS targets approximately ten years in advance,” the Luskin Center notes in a recent study.
Local control is at the heart of the CCA model. CCAs have a transparent rate-setting process that engages local consumer input and ensures accountability to their customers, not shareholders. And while investor-owned utilities’ profits go to corporate and institutional shareholders, CCAs invest their revenues back into their communities through programs that serve their customers’ needs and further our state’s decarbonization goals – rather than pumping up stock prices.
MCE, for example, a CCA serving customers in the Bay Area, offers rebates to low-income customers who install solar panels. Customers who participate have saved an estimated $2 million on their electricity bills. Over in Sonoma and Mendocino counties, Sonoma Clean Power is saving customers thousands of dollars through a number of different rebates, including electric vehicle incentives, while addressing one of the largest sources of greenhouse gas emissions in the state. North of Los Angeles, Lancaster Choice Energy is implementing a three-year program that will provide nearly $1.2 million in energy efficiency services to residential and small commercial customers.
CCAs bring a breath of fresh air to the energy market, accomplishing local and statewide climate goals while providing customers with reliable, affordable power and value-added programs. These are positive impacts we should embrace, not fear.
Dwight Worden is mayor of Del Mar, Catherine Blakespear is mayor of Encinitas and David Zito is mayor of Solana Beach.